Life in the middle (1): Decline and fall?

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One close relation to the current debate over inclusive growth and inequality that I highlighted in a previous post is a parallel discussion regarding the fate of the middle class. A particularly noteworthy feature of this second debate is that perspectives on the issue are highly conditional on just which middle class is under discussion.

Several analysts have worried about the potential negative consequences of this trend. For example, back at the start of this year, Francis Fukuyama had an essay in Foreign Affairs wondering whether liberal democracy could survive the decline of the middle class. Fukuyama has joined a growing number of pundits in arguing that a combination of technological change and globalisation had served to undermine middle class incomes in the developed world.

As well as this negative story about life in the middle, however, there is also a much more positive story to be told. That's the subject of my next post.